Tag Archives: The Innovator’s Dilemma

The “Innovator’s Dilemma” Applies To Management, As Well As Technology – Insight From Alan Murray (WSJ)

Here is some terrific, and challenging, insight from Alan Murray from the Wall Street Journal:  The End of Management: Corporate bureaucracy is becoming obsolete. Why managers should act like venture capitalists. The entire article is definitely worth reading.  Here are key excerpts:

“Modern” management is nearing its existential moment.

When I asked members of The Wall Street Journal’s CEO Council, a group of chief executives who meet each year to deliberate on issues of public interest, to name the most influential business book they had read, many cited Clayton Christensen’s “The Innovator’s Dilemma.” That book documents how market-leading companies have missed game-changing transformations in industry after industry—computers (mainframes to PCs), telephony (landline to mobile), photography (film to digital), stock markets (floor to online)—not because of “bad” management, but because they followed the dictates of “good” management. They listened closely to their customers. They carefully studied market trends. They allocated capital to the innovations that promised the largest returns. And in the process, they missed disruptive innovations that opened up new customers and markets for lower-margin, blockbuster products.

“The single biggest reason companies fail,” says Mr. Hamel, “is that they overinvest in what is, as opposed to what might be.”

The new model will have to instill in workers the kind of drive and creativity and innovative spirit more commonly found among entrepreneurs. It will have to push power and decision-making down the organization as much as possible, rather than leave it concentrated at the top. Traditional bureaucratic structures will have to be replaced with something more like ad-hoc teams of peers, who come together to tackle individual projects, and then disband.

Can the 20th-century corporation evolve into this new, 21st-century organization? It won’t be easy. The “innovator’s dilemma” applies to management, as well as technology. But the time has come to find out. The old methods won’t last much longer.

Those Netflix Envelopes Will Be Disappearing In The Blink Of An Eye – And Netflix Was Already Ready!

The two most important attributes of effective leaders are their abilities to predict and to delegate.
Verne Harnish, Mastering the Rockefeller Habits

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If you, if we, could only predict the future…

Do you remember when everyone wore a wrist watch?  They are disappearing, being replaced by cell phones.

Do you remember one hour developing — two copies of each print?  This has been replaced by digital cameras.

Do you remember Beta and VHS?  They have been replaced by DVDs, and now with streaming.

The list is long, and it will continue to grow.

One of the most e-mailed articles from the New York Times this morning is Always Pushing Beyond the Envelope by Damon Darlin.  Here’s a lengthy excerpt:

Blockbuster saw the change coming. It even took action, setting up its own mail service. But seeds of destruction had been sown, and Blockbuster is now financially troubled. Netflix, meanwhile, is already embracing technology shifts that will make those red envelopes a quaint memory.

Creative destruction has such a cataclysmic sound. But the term, coined by the Austrian economist Joseph Schumpeter to show how capitalism destroys companies as more innovative ones succeed, describes a process that is more like a slow-motion train wreck.

Consider silver halide photographic film, a technology cited in “The Innovator’s Dilemma,” Clayton M. Christensen’s 1997 book about established companies’ struggle with disruptive technologies. Kodak saw digital photography coming. It even invented some of the earliest such technology, in 1975.

Kodak just misjudged how fast consumers would give up on film and start snapping up digital cameras. And it misjudged its ability to outrun both trends.

“It’s kind of alarming,” said Henry C. Lucas Jr., a professor of decision, operations and information technologies at the Robert H. Smith School of Business at the University of Maryland. “It’s not like they had to turn around overnight.”

Even when Kodak wanted to change, it couldn’t, said Mr. Lucas, who has studied the company. “It was so large and had been so successful for so long that it was difficult to bring in people with a digital background.”

The innovator champion predictor Gold Medal has to go to Reed Hastings.  He saw the future even as he introduced a new/current product, and named his company not for its current product, but for its future product.  From the article:

The company was formed in 1997 with the idea of sending movie DVDs, then a new technology, through the mail. But Reed Hastings, the founder and chief executive, and early employees, recognized that delivery of movies over the Internet would replace the mail carrier soon. They named the company Netflix, not Mailflix or DVDs by Mail.

“DVDs by Mail would have been an easier concept to understand in 1999,” said Steve Swasey, the company’s chief spokesman.

So – here is the burning question for today – what will be the products, the services, the innovations that will dominate the landscape tomorrow.  If only we knew!

Someone’s going to make a whole lot of money with the answer to that question.

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Great timing department:  Bob Morris just posted Clayton Christensen asks, “How will you measure your life?” (Christensen is the author of The Innovator’s Dilemma) on our blog this morning.